Commission Rule 58A .0110(g)(9) requires Brokers-in-Charge to complete the Commission’s Basic Trust Account Procedures Course within 120 days of assuming responsibility for a trust account provided they have not already completed the course within the previous three years. If the BIC never opens another trust account or assumes control of another one, they are not required to complete the course again.
Even so, BICs are encouraged to complete the course on a more routine basis. For the 2020-2021 license year, the mishandling of trust account funds resulted in almost 20% of all disciplinary actions. The Commission has since revamped its Basic Trust Account Procedures Course and now offers it through distance (self-paced online) delivery on our Online Training Portal (https://learn.ncrec.gov). While trust account issues have slowed, mismanagement of the funds of others remains an ongoing issue.
While all licensees must safeguard and protect the money and property of others entrusted to them, the ultimate responsibility to oversee and safeguard the monies of others passing through the office rests with the BIC. The BIC remains responsible for the trust account, even if they hire an assistant, accountant, or bookkeeper to assist with record-keeping. Brokers should be mindful of the fact that embezzlement can happen even with trusted bookkeepers or long-time employees, and it is made easier when there is no oversight of their activity.
Since the responsibility ultimately falls on the Broker-in-Charge, it is in their best interest to maintain a working knowledge of how to properly maintain a trust account. BICs who complete the course will, at a minimum, learn what they need to know to adequately supervise their bookkeeper and what the software program needs to be able to produce in the way of reports in order to be compliant. As a bonus, it also qualifies as an elective continuing education course.
Whether a Broker-in-Charge personally maintains their brokerage’s trust account or delegates that responsibility to others, it is essential they maintain an active working knowledge of the rule requirements regarding the handling and reconciliation of funds in that trust account. Even if a BIC is in compliance with the minimum requirement to complete the Basic Trust Account Procedures Course once, it is highly recommended they regularly review and complete the course in order to ensure the safeguarding of their clients’ money and for the protection of their own business.
Prior to listing their property, the Seller completed the Residential Property and Owners’ Association and Disclosure Statement (RPOADS) and Mineral and Oil and Gas Rights Disclosure Statement (MOG). The Seller marked “No Representation” for their responses on the RPOADS.
Buyer and Seller went under contract using the NCAR/NCBA Standard 2-T Offer to Purchase and Contract. During the Due Diligence Period, Buyer discovered an issue that the Seller chose not to repair, nor did the seller offer concessions. Buyer terminated the contract and requested the return of the non-refundable Due Diligence Fee (DDF). The buyer agent (BA) threatened to file a complaint against the listing agent (LA) with the Commission if the Seller did not refund the DDF based on the seller’s lack of disclosure. The repair issue in question may or may not have been something the LA should or could have reasonably known existed.
In North Carolina, a broker should consider the following points:
If you have any questions or need further clarity, you may email Regulatory Affairs at regulatoryaffairs@ncrec.gov.
The federal Corporate Transparency Act (CTA) was passed in 2021 and included significant reforms to prevent money laundering, combat terrorist funding and reduce corruption and tax fraud. Part of the CTA was the creation of an e-filing system that would require certain types of U.S. and foreign entities to report beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury.
The mandatory report is called a Beneficial Ownership Interest Report (BOIR). Most LLCs, corporations and other legal entities are required under the new law to file the BOI Report with FinCen or face potential substantial penalties.
The law is currently the subject of legal challenges. Filing deadlines have been imposed, temporarily halted, and reinstated. The North Carolina Real Estate Commission recommends that brokerage entities in North Carolina who have not already filed promptly seek out specific legal advice as to how the law applies to them and any filing deadline to which the brokerage firm may be subject. More information is available at https://www.scotusblog.com/case-files/cases/garland-v-texas-top-cop-shop/.